Parafin is a financial infrastructure company that provides platforms with embedded financial products for their small businesses by abstracting the complexity of capital markets, underwriting, servicing, compliance, and customer support. By powering the financial services of marketplaces and payment processors, small businesses can run and grow themselves despite uncertain economic conditions. In less than three years, Parafin has launched on Amazon, Walmart, Worldpay, and more platforms to serve hundreds of thousands of businesses and extended over $8 billion in offers. Parafin was founded in 2020 by Sahill Poddar, Vineet Goel, and Ralph Furman, and is backed by GIC, Notable Capital, Redpoint Ventures, Ribbit Capital, and Thrive Capital.

The Parafin team started with Modern Treasury’s Payments product but later expanded to use the company’s Ledgers product. This combination created a single source of truth for payments data, improving the traceability of third-party funds and safeguarding customer funds. As John Quine, Head of Accounting at Parafin, notes, “Modern Treasury's ledgers have transformed our reporting capabilities. By enhancing our reporting pipelines and providing comprehensive audit trails, Modern Treasury allows us to provide customers, lenders and auditors with unprecedented visibility into accounts, reinforcing trust in our financial operations.”

• As a turnkey solution, Parafin is a one-stop shop for credit: everything from underwriting to the funding, servicing, and supporting the capital product. Money movement, therefore, is an important part of their platform and the overall customer experience.
• To support these flows, Parafin required a payments solution that afforded a high degree of speed, control, and flexibility. Parafin needed faster payments to fund the sellers as soon as they accepted a capital offer. As they expanded their client base and product offerings, Parafin saw an opportunity to increase efficiencies with a single source of truth for payments data.
• By partnering with Modern Treasury to unify payments and ledgering, Parafin has built a scalable foundation for continued innovation, audit-readiness, and growth in the financial services industry.

After looking at various options in the market, Parafin knew that they required direct bank relationships to achieve the speed, control, and flexibility they needed. “It was really a question of us using Modern Treasury or building bank integrations,” said Ralph Furman, Co-Founder. “There weren’t any other options on the horizon that we felt addressed our specific needs.”

Parafin wanted to get to market quickly while minimizing development cost.

Based on experience, Parafin understood the complexity and opportunity cost of building these bank integrations from scratch. They also recognized the need to build and maintain operational tooling, including a dashboard to oversee their payment flows and better reconciliation capabilities.

Considering the bank integrations and operational tooling, Parafin realized that building payments infrastructure in-house would be a serious, ongoing engineering investment, spanning multiple months. This was more than they wanted to commit to with so many other needs across their platform. “We did not want to spend precious engineering time building something that we didn’t need to,” explained Furman.

Upon an initial review, Parafin was confident that Modern Treasury was the right partner to remove the complexity of payments infrastructure and put them on the fastest, easiest path to go live.

For Parafin, getting up and running with Modern Treasury was seamless. Modern Treasury made everything clear and direct—from the API documentation to the customer support, even the guidance to send a specific integration email to a designated contact at their bank.

”It took three months from the time we committed to our business model to having our first dollar out the door. I would really say that a lot of that has been a testament to the relationship which we’ve had with Modern Treasury.”

Ralph Furman, Co-founder at Parafin

Within days, Parafin began configuring workflows and sending payment orders in the Modern Treasury dashboard. Modern Treasury also gave Parafin the control and visibility they needed to provide an embedded, white-labeled payments product to their partners.

For example, Parafin could manually create payment orders and architect workflows in the dashboard before automating their payments. Parafin gained confidence and clear visibility into their payments as they launched their product. As Parafin became more comfortable with their payment flows, they started automating their workflows with Modern Treasury’s APIs—first, their payment orders to the banks, then counterparty (i.e., seller) details; they then subscribed to Modern Treasury’s webhooks to track statuses and manage returns.

“The real appeal of Modern Treasury was that we could easily develop a no-code version of the product almost instantly. And then, once we were able to get some system experience, we were able to progressively automate and productionalize.”

With Modern Treasury’s platform, Parafin could take full advantage of programmatic money movement without feeling like they had to sacrifice control or visibility into their workflows.

Lastly, Modern Treasury’s intuitive platform gave Parafin the tools to manage and report on their payment flows to their partners, users, and external third parties. Multiple teams at Parafin use the Modern Treasury platform to execute their jobs or better understand their payment functions. Here are a few examples:

• Parafin’s engineering team customizes payment description strings in the Modern Treasury API to achieve a white-labeled experience.
• To answer client support questions, Parafin’s Support Team uses its read-only privileges to track payment statuses.
• To fund capital, Parafin's Funding Operations Team approves payment orders in the app upon completion of the funding checklist, which includes a review of past payment activity for potential issues.
• Parafin uses push-to-warehouse to retrieve data and create reports and analytics.
• To control account verification, Parafin uses Modern Treasury’s multiple authentication options.

To efficiently and programmatically transfer excess funds between internal accounts, Parafin's Accounting Team can automatically sweep excess funds from collections accounts to disbursement accounts on a daily basis.

Since launching their platform with Modern Treasury, Parafin has rapidly expanded their client base and product offerings. As they approached their next phase of growth, they saw an opportunity to increase efficiencies with unified payment operations.

With more customers and products, Parafin needed to track balances with precision at a larger scale. Not only would this create a better customer experience, but it would also support reporting and audit-readiness in a heavily regulated industry.

"Launching new lending solutions presented an opportunity to build a single source of truth for our payments data. Implementing Modern Treasury’s immutable, double-entry ledger would enhance our operations with accuracy, security, and auditability," shares John Quine, Head of Accounting at Parafin.

By expanding its partnership with Modern Treasury, Parafin unified payments and ledgering to build a single source of truth for transactional data. This has strengthened Parafin’s position as a trusted financial services provider.

For example, Modern Treasury helps Parafin maintain accurate custodial balance records, provide traceability for third parties, and safeguard customer funds with FDIC deposit insurance.

Parafin also uses Modern Treasury’s transaction categorization feature to automatically enrich transactions with metadata to drive faster, consistent reporting across workflows.

Quine noted that, "Transaction categorization offers a ton of leverage for our team as we continue to streamline how we’re generating cash journal entries today and piping that data into NetSuite. We’re moving towards migrating to Ledgers more for internal accounting use cases."

Parafin has grown tremendously in the past few years as the need for capital and small business funding increased. Recently, they announced partnerships with a number of high-growth platforms, including Walmart and TikTok. They anticipate continued growth in the years ahead as they onboard new platforms and products.

Now that they’ve established a single source of truth with Modern Treasury’s platform, Parafin is poised to scale its accounting and reporting infrastructure across all product offerings.

The company is also looking to shift to instant capital disbursements via RTP and Fednow to elevate their customer experience by allowing them to send capital to their customers when they need it, including on weekends and holidays. They plan to work with Modern Treasury and J.P. Morgan and their other bank partners to deliver these capabilities.